Operation Green

The finance minister Arun Jaitley in his budget speech has sent out a clear message that agriculture sector is the top priority for the government. Countering the agrarian distress despite record production in the country needed to be addressed urgently. He has, therefore, taken initiatives that help protect income, provide access  to markets and promote diversification. These steps, in addition to earlier initiatives in the area of soil health, crop insurance, completion of ongoing irrigation projects will go a long way in safeguarding the farmer from fluctuating revenues. Let’s look at some key announcements and how it will impact the farmer.

With the minimum support price (MSP) for farm produce to be one and half times of the cost of production, prime minister Modi has taken the first step towards fulfilling one of the major pre-poll promise, that was also an integral part of the party vision document released in the year 2014. As implementation of the proposal is critical, it will be helpful if the government can elaborate the basis of arriving at the cost of production and method of roll out. This is critical as timely compensation to the farmer is important from his cash flow point of view.

The proposal to develop 22,000 garmin markets and link each of them to e-NAM is a welcome move as it will bring easy access to markets as well as transparency in price discovery.  Given the scale of the task, it may be useful to bring in private sector participation for faster roll out. A suitable PPP model or allocation of some markets to the private sector on a pilot scale should be looked at. This can then be replicated.

Horticulture crops are typically grown in clusters  based on the soil and climate conditions. Therefore, the reorientation of schemes to promote cluster based development is a move in the right direction. It will bring technology, innovation and market access to farmers. Further farmers will grow based on accurate market demand from processors and it will prevent crash in prices. Direct buy back will also improve realisation to farmer by removing intermediaries.

n The outlay of Rs 500 crore on operation green will address the three main crops that constitute 60 per cent of the vegetable output, as well bring expertise to FPOs. It will help reduce wastages, provide remunerative prices to farmers and ensure price stability for consumers. It is essential that a robust institutional mechanism is set up to support good management practices within FPOs. This is necessary to prevent weaknesses that often afflict cooperatives.

By extending kisan credit card and creating a Rs 10,000 crore fund for animal husbandry it captures the changing composition of the agriculture sector. We need to remember that animal husbandry and fisheries contribute almost 30 per cent GDP to agriculture.

n Announcing a proposal to liberalise export of agricultural products, the finance minister highlighted underlying potential of $100 billion as against the current figure of $30 billion. This is quite achievable, given that in the past, the country has exported $42 billion in a year. Therefore, setting up of a state of art facility at 42 food parks for further promotion of agri-exports is a much-welcome move. Stability in trade policy will be key requirement, something already signalled by the commerce ministry.

The effort to recognise lessee cultivators as farmers and provide them with benefits of government schemes is commendable. This category cultivates anything from 20 per cent to 40 per cent of land, depending on the crop and the region. This will help raise production, utilise land and importantly provide relief to the most vulnerable section of the farming community.

Overall the measures spelt out in the budget reflect a deep understanding of the challenges faced by the farmer and will go a long way in sustaining rural livelihoods and not just increasing production. Agriculture sector, employing around half the total workforce of the country and yet contributing only 15 per cent (approx) of the country’s GDP, is hoping that the spate of initiatives announced will usher in buoyancy  for rural India.

Finally, as agriculture is a state subject, I can’t stress more about the importance of effective implementation of these initiatives with the support of the state governments. Fortunately the working of the GST council has shown that it is possible to introduce reforms for common good, even in a complex federal structure like ours. I would, therefore, leave one thought for government to consider. Create a formal forum for agriculture, just like a GST Council. It should have state and central government representatives where all policy issues and implementation challenges are discussed and solutions arrived at. Needless to say it should have some authority so that its advice carries weight. Niti Ayog will need to take this initiative and suggest an appropriate structure.

(The writer is chairman & senior managing director, DCM Shriram)